Corporate Social and Environmental Performance and Their Relation to Financial Performance and Institutional Ownership: Empirical Evidence on Canadian Firms
Posted: 25 May 2002
Date Written: Undated
Social and environmental accounting issues became a topic of both academic and practitioner research approximately 20 years ago. Since that initial surge of interest, however, a relatively modest number of academic and practitioner studies have been performed. Recently, national governments, corporations, professional accounting associations, and professional services firms are beginning to show a strong, renewed interest in corporate social responsibility, performance and reporting, stressing a perceived relation between social and environmental performance and measures of firm success.
This study tests empirically the relation of social and environmental performance to financial performance and institutional ownership. Utilizing four years of panel data for a sample of Canadian firms, we find a significant and positive relationship between a firm's environmental performance and its financial performance. In addition, our findings indicate a significant, positive relationship between a firm's social performance and the number of institutions owning its shares. These results partially support arguments that corporate social and environmental performance is positively related to firm success.
Keywords: social and environmental reporting, institutional ownership, financial performance, Canada
JEL Classification: M41, G34
Suggested Citation: Suggested Citation